Feds begin probe into stimulus spending

CHARLESTON, W.Va. -- The U.S. Department of Commerce inspector general has started an investigation into West Virginia's use of $126.3 million in federal stimulus funds to expand high-speed Internet.

The Office of Inspector General plans to determine whether the state spent the broadband stimulus funds "properly and efficiently." The office also will examine whether West Virginia's application for the stimulus funds included "material misrepresentations," according to a letter released by the inspector general's audit division.

U.S. Reps. Greg Walden of Oregon and John Shimkus of Illinois requested the review, following a series of Charleston Gazette reports that raised questions about West Virginia's stimulus spending.

"I am pleased that our concerns about this spending are being investigated," Shimkus said Wednesday. "We just wanted answers, and this seems to be an appropriate step to determine if any policies were violated."

Gov. Earl Ray Tomblin's administration, which is responsible for implementing the broadband project, promised to cooperate with the review, which is expected to last eight months to a year.

"We are happy to assist the inspector general and provide any needed information," said state homeland security chief Jimmy Gianato, who also heads the state's three-member broadband project team. "We believe we have a good grant and believe this is going to give great opportunities to all West Virginians."

The inspector general has scheduled a special meeting today with leaders of the National Telecommunications & Information Administration, the federal agency overseeing West Virginia's $126.3 million grant. West Virginia officials were not invited.

During the review, the inspector general plans to ask NTIA officials to explain how they evaluated West Virginia's request for the stimulus funds, and what steps the federal agency took to verify state officials' claims in the federal grant application.

In the application, former Gov. Joe Manchin's office said the state would build 2,400 miles of fiber, but the project's current plan calls for 567 miles of fiber.

"As always, we will work cooperatively with the inspector general's office as they conduct their review," an NTIA spokeswoman said Wednesday. "We thoroughly reviewed this application before awarding the grant and continue to believe this project will bring much-needed benefits to the people of West Virginia."

The inspector general started the review Friday. Agency auditors plan to review documents at NTIA's headquarters in Washington. Auditors also are expected to inspect sites and question officials in West Virginia.

"In general, our review will involve interviews with officials from West Virginia and the NTIA, site visits and the review of documentation," said Clark Reid, the inspector general's legislative and external affairs officer.

In 2010, West Virginia received a $126.3 million federal stimulus grant to bring high-speed fiber-optic cable to 1,064 "community anchor institutions" -- schools, libraries, county courthouses, 911 centers, health-care clinics and state agencies. State officials have used $24 million from the grant to purchase Internet routers.

The Gazette has reported that the Cisco 3945 series routers were built to serve a minimum of 500 users, and up to tens of thousands of users. But the state has installed the "enterprise-class" devices in some public facilities with only a few Internet connections. Seventy percent of the routers wound up in schools and libraries.

Walden and Shimkus, who serve as chairmen of two House Energy subcommittees, cited the Gazette's reports during a May 16 hearing on Capitol Hill. The House Republicans grilled the Obama administration's telecommunications chief, Lawrence Strickling, about West Virginia's router purchase.

The Gazette also has reported that more than 300 routers remain boxed up in storage. The routers -- purchased in July 2010 -- came with a five-year service warranty, so the state already has lost two years of free maintenance on the devices.

State officials are working to find sites to install the routers. The devices funnel data, such as email and websites, from one computer network to another.

The Office of Inspector General investigates allegations of "waste, fraud and abuse," according to the agency's website. The inspector general has previously audited other NTIA broadband programs.

West Virginia so far has spent $56.4 million of the $126.3 million broadband grant.

In addition to the routers and fiber, the state is using the stimulus funds to build 12 new microwave towers designed to improve the state's public safety system.

The stimulus money also will pay to bring fiber cable from the Green Bank Observatory in Pocahontas County to West Virginia University. That project will allow scientists and researchers to transfer data more quickly.